Ask Question
6 August, 09:09

Nancy Jackson is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $37,000 for the down payment. If Nancy can invest in a fund that pays 7.40 percent annual interest, compounded quarterly, how much will she have to invest today to have enough money for the down payment

+3
Answers (1)
  1. 6 August, 11:26
    0
    Down payment = 37,000 given in the question

    Rate of return = 7.4%/4 = 1.85% quarterly return

    Total Quarterly = 5*4 = 20

    Amount Required = ?

    We will apply the Compound Formula = S=p (1+i) ^n

    S is the future payment that is 37000

    P is present payment required to be invested

    I is the interest rate that is being paid on investment 7.4% annually divide it by 4 to have quarterly return

    N is the number of quarters

    P=S / (1+i) ^n

    P=37,000 / (1+1.85%) ^20

    P=37,000/1.4428

    P=25,644

    Amount that is required to be invested today is $25,644
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Nancy Jackson is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers